Original article from: Yahoo! News
The U.S. economy needs all the help it can get in this recovery, but the Federal Reserve has expressed frustration at the inability of Capitol Hill and the White House to do more.
When Fed Chairman Jay Powell fields questions at the conclusion of the Federal Open Market Committee’s meeting on Wednesday, will he show signs of fatigue in asking for more fiscal support? Or will he push harder for more help?
Powell’s tone could offer clues into the Fed’s next steps.
“The Fed can’t generate demand,” ING’s James Knightley wrote September 12. “For that we will need to see additional fiscal stimulus, but that is looking only a remote possibility ahead of the November 3rd elections.”
LEFT VIEWPOINTS
- For anyone not familiar with what the Fed does, watch the video called, How the Economic Machine Works in 30 Minutes, by Ray Dalio. We’ve posted it below. Ray Dalio created that video in 2014, and it’s one of the most fascinating ways to visualize the economy that we’ve come across.
- When an economic collapse happens, such as the 2008 financial crisis or the 2020 financial crisis, the Fed can rescue the economy by printing money. But the Fed can’t spend the money it prints. Only the government can spend the money, so it borrows the printed money from the Fed. Unfortunately, we need Congress and the president to cooperate in order to allocate money appropriately, and that doesn’t happen with our current political environment.
- Dalio once said that he thinks of the economic collapse like a big “monetary” hole that needs to be filled. The Fed printed enough money to do that, but it can’t get the money there. Only Congress can do that. Instead of thinking of it as one big monetary hole, think of it instead as multiple smaller holes. Unfortunately, Congress will likely overfill some holes (Wall Street) and underfill other holes (Main Street).
- Going forward, we really should be talking about UBI (Universal Basic Income) and public-funded universal healthcare. Those two policies alone would ensure that the Main Street holes are adequately filled, even with a dysfunctional government.